Trade Negotiations Insights • Volume 7 • Number 5 • June 2008
Trade and innovation in the EPAs: another step towards re-framing TRIPS
CARIFORUM states are small, highly open, vulnerable, service economies with limited production capacities and high external debts. These economies have received significant support from Europe for many years—even though it is not the region’s major trading partner—through preferential market access arrangements for key commodity exports. Yet, challenges to the WTO compatibility of these arrangements by non-ACP developing countries and others have hastened their erosion. As a result, it was agreed that an alternatively advantageous WTO-compatible arrangement would be negotiated between CARIFORUM and Europe.
CARIFORUM states subsequently concluded a WTO-compatible agreement that would slow the erosion of the preferential access for their goods and open up access in areas suited to their new structures as service economies.
The innovation trend
In negotiating this agreement CARIFORUM recognised that, as small economies, they suffer the disadvantage of diseconomies of scale in the global market. They therefore negotiated the inclusion of provisions that would assist in the development of innovation systems, anticipating the contribution of such systems to the differentiation of their export products. During this negotiation process, CARIFORUM and the European Commission determined an appropriate balance between the level of development and the level of protection provided for intellectual property rights. In this respect, the discussions taking place within the World Intellectual Property Organisation concerning that organisation’s Development Agenda were also considered.
In developing arguments to back up its position, CARIFORUM paid close attention to the EU’s own efforts to support innovation— particularly for small and medium enterprises—in its Lisbon Agenda. The region looked to the ongoing efforts and programmes of other developed and developing countries to continually improve their level of innovation and their innovation systems as well. For example, CARIFORUM pointed to the work supported by the World Bank in the development of Mexico’s innovation systems arising from that country’s experience within the North American Free Trade Area. Projects carried out by the Inter- American Development Bank and the United Nations Economic Commission for Latin America and the Caribbean among others were likewise taken into account.
These programmes showed a trend recognising that without strong innovation systems in developing countries, there is likely to be little or no benefit derived from increasing protection for trade-related intellectual property rights in free trade agreements.
The challenge with technology transfer
This came as no surprise; the World Trade Organisation Traderelated Intellectual Property Rights Agreement (TRIPS) contains language recognising this relationship between innovation and protection. Article 66.2 in particular acknowledges the need for affirmative action by developed country WTO Members so that least developed country (LDC) Members might establish a viable technological base through technology transfer.
Establishing this base is not without its obstacles. In recognition of the challenges with technology transfer obligations, WTO Members established both a reporting mechanism within the TRIPS Council and a Working Group on Trade and Technology Transfer. Regrettably, neither of these has, as yet, identified appropriate measures that would enable LDCs to accrue the gains they had originally hoped for. In light of this, when CARIFORUM countries began negotiations on these terms with the EU they pressed for a commitment to promote the use of the measures, rather than merely making them available for their firms and enterprises.
Innovation systems development
But innovation relies on much more than technology transfer. Indeed, many discussions on innovation often focus on science and technology, while excluding consideration of other industries that rely on creativity, like the entertainment industry. And yet it is in the production and provision of these less tangible products that CARIFORUM saw itself as having an already established and competitive creative advantage.
In order to develop internal innovation systems, as well as to establish partnerships with innovative EU enterprises with similar interests, it is critical that there is close coordination with the negotiations concerning market access in services and investment. Coordination with market access negotiators is also important where, for example, in the audio-visual sector the equipment can be classified as a luxury item as opposed to production equipment, increasing the cost to producers.
Lessons learned
Two principle lessons were learned that are of value to other ACP regions as they consider what elements they may wish to add to their current interim agreements on goods. The first is on the value of collaboration during the regional and extra-regional negotiations and across subject areas. The second lesson is the need to find the right synergies between the innovation objectives of the EU and those of the particular ACP region.
Recommendations
Recommendations for other ACP regions to consider are therefore as follows:
• Determine an appropriate and flexible industrial policy;
• Identify priority areas for attention in the development of national innovation systems, not limiting the focus to science and technology;
• Determine synergies that might be established through the development of regional innovation systems;
• Look for areas of collaboration in innovation that could capitalise on the interests and advantages of both the relevant region and the EU; and
• Determine the level of intellectual property protection appropriate for each priority area identified for the relevant innovations systems and link this to the level of development of such systems.2
1 Malcolm Spence is the Senior Coordinator for Intellectual Property, Science and Technology Issues at the Caribbean Regional Negotiating Machinery.
2 For further discussion on this topic, see: Innovation and Technology Transfer: Lessons from the CARIFORUM EPA Experience, Malcolm Spence, CEMAC Regional Dialogue on EPAs, IPRs, Innovation and Sustainable Development ICTSD and ACDIC April 28-29 2008. www.iprsonline.org/ictsd/Dialogues/2008-04-28/Spence_Paper2.pdf